15.905 technology strategy - massachusetts institute of ... while: railroad gauges in the 19th...
TRANSCRIPT
15.905 Technology Strategy
15.905 Technology StrategyStandards battles and warsMichael A M Davies25 April 2007
Michael A M Davies25 April 2007, Page 2
15.905 Technology Strategy
Agenda for today, Wednesday 25 April 2007
~12:45~13:30
Standards battles and warsQuestions?
– clarification of issues– case studies– concepts and
frameworks– assignments– projects
Michael A M Davies25 April 2007, Page 3
15.905 Technology Strategy
High-tech businesses are built on systems, with interfaces, which may be standards
• Products part of larger and more complex systems
• Systems are comprised of sub-systems and components
• Sub-systems and components are integrated, made compatible, through interfaces
• Interfaces can be customized or standardized, as compatibility standards
• Products are comprised of multiple (sub-)systems
Michael A M Davies25 April 2007, Page 4
15.905 Technology Strategy
ZigBee
http://www.zigbee.org/en/about/
“…an association of companies
working together…”
“…an association of companies
working together…”
“…to enable …products based on
an open global standard…”
“…to enable …products based on
an open global standard…”
“…providing interoperabilityand conformance
testing specifications…”
“…providing interoperabilityand conformance
testing specifications…”
Image removed due to copyright restrictions.
Michael A M Davies25 April 2007, Page 5
15.905 Technology Strategy
Z-Wave Alliance“…an open
consortium of manufacturers…”
“…an open consortium of
manufacturers…”
“…who build products based on
Z-Wave…”
“…who build products based on
Z-Wave…”
“…allow all products from all
members to interoperateseamlessly…”
“…allow all products from all
members to interoperateseamlessly…”
“…stringent conformance test to assure … complete
interoperability with all other devies and
controls…”
“…stringent conformance test to assure … complete
interoperability with all other devies and
controls…”
http://www.z-wavealliance.org/modules/AboutUs/
Image removed due to copyright restrictions.
Michael A M Davies25 April 2007, Page 6
15.905 Technology Strategy
ZigBee and Z-Wave are battling each other, albeit with different strategies…
• “The ZigBee Alliance is a global ecosystem of companies creating wireless solutions for use in residential, commercial and industrialapplications”
• “[It] comprises technology providers and original equipment manufacturers worldwide. Membership is open to all.”
• “…the only wireless standards-based technology:– that addresses the unique needs of remote
monitoring & control, and sensory network applications
– enables broad-based deployment of wireless networks with low cost, low power solutions
– provides the ability to run for years on inexpensive primary batteries for a typical monitoring application”
• “Initial markets– Home Automation– Building Automation– Industrial Automation”
• “The Z-Wave Alliance members lead the home controls market…”
• “ …more than 125 companies are developing products that incorporate the Z-Wave technology.”
• “…Zensys’ Z-Wave technology is the only technology in the market with a true ecosystem of interoperable products that focuses on the home automation segment.”
• “Unlike competing technologies, Z-Wave-enabled products are readily available from leading consumer brands, giving Z-Wave a significant time-to-market advantage
• “Recent findings…have confirmed existing doubts about the viability of wireless control products based on IEEE 802.1.5.4, such as those from the ZigBee community… [and] clearly demonstrated that… products using 15.4 technology are seriously compromised and often inoperable even within the most basic residential”
ZigBee Alliance Z-Wave Alliance
Michael A M Davies25 April 2007, Page 7
15.905 Technology Strategy
[Compatibility] standards have been around a long while: railroad gauges in the 19th century
• Standard gauge 4’ 8½”– George Stephenson– built the Stockton &
Darlington Railway– the Rocket
• broad gauge 5’0”– American South– Finland
• broader gauge 7’0¼”– Great Western
Railway
Michael A M Davies25 April 2007, Page 8
15.905 Technology Strategy
Standards battles have been going on for a long while• Electric Power• Roads• Color Television• Air travel
• Video cassettes• Cellphones (1)• Personal computers• 56k modems
• Cellphones (2)
• Documents
• DC (Edison) vs AC (Westinghouse)• Width, side of the road, signage• Mechanical (CBS) vs electronic (RCA)• Door on front left, jetways/airbridges,
taxi ways• Betamax (Sony) vs VHS (Matsushita+)• Several co-existing standards• Windows vs MacOS• K56flex (Rockwell/Lucent) vs
x2 (US Robotics/3Com) vs v.90• TDMA (Ericsson/AT&T) vs CDMA
(Qualcomm) vs GSM (EU+) vs PHS• PDF (Adobe) vs Reader/ (Microsoft)
Michael A M Davies25 April 2007, Page 9
15.905 Technology Strategy
What triggers standards battles, and what are the outcomes?
• How important are network effects, how much consumers value broad compatibility
• Two (or more) businesses or business ecosystemsvying for dominance
• Tipping– “fight to the death”
• Truce– convergence– comprise
• Two (or more)– no tipping– duopoly or oligopoly
Michael A M Davies25 April 2007, Page 10
15.905 Technology Strategy
If network effects, so-called network externalities, are important, adoption may tip
Likelihood next
customer chooses to
adopt A
A’s share of current adoption - the installed base
0% 100%0%
100%
• Direct or real networks– people I can talk to– content I can use– places I can go
• Indirect or virtual networks
– software and hardware– development
communities– complements
Metcalfe’s Law:Value
∝ n(n-1) = n2 - n
Michael A M Davies25 April 2007, Page 11
15.905 Technology Strategy
Types of compatibility standards
Although details of standard are published,
owner(s) controls evolution and may
capture value• Windows• SD cards
Standards are publicly owned or held in
common• TCP/IP• GSM
Standards publicly owned or held in
common, but kept secret
• cryptography• GSM secret keys
Interfaces amongst sub-systems, modules or
components are standardized, but not published externally• IBM 360 series
• Apple
Proprietary Public
Open
Closed
Information
Control
Michael A M Davies25 April 2007, Page 12
15.905 Technology Strategy
In practice, the extent of control and the availability of information are both a continuum
Proprietary Public
Open
Closed
Information
Control
Linux
Symbian
CDMA
Z-Wave ZigBee
IBM360
GSM
Michael A M Davies25 April 2007, Page 13
15.905 Technology Strategy
And each type of standard has distinct advantages and disadvantages
Proprietary Public
Open
Closed
Information
Control
As producer,
value capture
for owner
As user, value
capture by
owner
SupportTime to market
Performance
Michael A M Davies25 April 2007, Page 14
15.905 Technology Strategy
Compatibility
Performance
Technology envelopes and trade-offs
• Adopters face a trade-off between better performance and the payoff from network effects
Michael A M Davies25 April 2007, Page 15
15.905 Technology Strategy
Types of standards battles
Evolution vsrevolution
Rival revolutions
Revolution vsevolutionRival evolution
Compatible Incompatible
Incompatible
Compatible
Rival’s Standard
YourStandard
Michael A M Davies25 April 2007, Page 16
15.905 Technology Strategy
Key assets in standards battles
• Prior adoption– installed based from previous era– helpful with evolution strategy
• Technological innovation– deliver superior performance– helpful with revolution strategy
• Timing, being first-to-market– get there early, establish momentum, learn
• Intellectual property rights– Qualcomm’s patents for CDMA
• Strength in complements– influence overall system level performance
• Reputation– credibility, players expectations are that you will win… so you are
more likely to
Michael A M Davies25 April 2007, Page 17
15.905 Technology Strategy
Two key strategems for standards battles
• Pioneering - pre-emption– just do it– pioneer an early lead so
that positive feedback works for you
– early entry - with associated trade-offs and risks
– penetration pricing -which needs to be re-couped
• Prosletizing - expectations management
– convince players that you will win
– vaporware– “predatory product
pre-announcements”– assembling alliances,
announcing adoption– fear, uncertainty and
doubt - FUD
Michael A M Davies25 April 2007, Page 18
15.905 Technology Strategy
Standards forums - let’s go shopping!
• What are the costs involved in participation?• Who are the participants?
– incumbents or insurgents– customers or producers
• What is the intellectual property regime?– disclosure and licensing - what is “reasonable”– rights held by non-participants
• What is the process by which decisions are made?– consensus– voting
• How is compliance enforced?
Michael A M Davies25 April 2007, Page 19
15.905 Technology Strategy
Interesting standards battles going on today
• Low-power wireless
• Mobile OSs
• Mobile TV
• Web content
• High definition content
• Documents
• Mobile broadband
• ZigBee vs Z-Wave (Zensys) vsISA-SP100
• Symbian (Nokia and others) vsWindows Mobile (Microsoft) vsLinux
• MediaFlo (Qualcomm) vs DVB-H vs DMB
• Flash (Adobe) vsSilverlight (Microsoft)
• Blu-Ray (Sony) vsHD-DVD (Microsoft)
• OpenDocument vsOpenOffice XML (Microsoft)
• WiMAX vs IEEE 802.20(?) vs LTE
Michael A M Davies25 April 2007, Page 20
15.905 Technology Strategy
It can get ugly… and expensive (particularly once the lawyers or the government get into it)
• Qualcomm’s tactics in mobile broadband– August 2005 pays $818 million for Flarion– September 2005 revives 802.20, proposes OFDM-based technologies– June 2006, IEEE suspends 802.20 at Intel and Motorola’s instigation– Chairman had not disclosed that he is a consultant for Qualcomm– ~20 paid consultants voting as a bloc
• Qualcomm in deathmatch over 3G– royalties of ~5% on its CDMA, with >80% of the patents, generating
~$2.5 billion per year– wants ~5% on W-CDMA (vs ~3% incumbents pay), <20% of patents– in litigation with Broadcom and Nokia
• Rambus found by FTC to have deceived JEDEC about its patents– amended its patent applications to extend their scope– tried to charge a royalty rate of 3.5%
• Microsoft in a stand off with EU– unreasonably high prices for Windows Server Protocol Program– threatened with “structural separation”, fines of €3 million per day
Michael A M Davies25 April 2007, Page 21
15.905 Technology Strategy
Standards battles in high-tech seem to be getting more contentious
http://techon.nikkeibp.co.jp/article/HONSHI/20070328/129634
Image removed due to copyright restrictions.